Guide to Structuring a PES Project. Michael Richards and Tommie Herbert

Transcription

1 Guide to Structuring a PES Project Michael Richards and Tommie Herbert Training Workshop on Payments for Ecosystem Services (PES) and Reducing Emissions from Deforestation and Forest Degradation (REDD+) 8 August 2011

2 Guide to Structuring a PES Project Identify demand and supply potential Assess legal, policy and institutional basis Develop a Project Idea Note (PIN) Structure PES agreement Implement & monitor project

3 1. Identify Demand and Supply Potential: is there a project? Identify demand / potential buyers of ecosystem services (ES) Identify sellers and legal basis for sale Define, measure and assess ES in a project area Determine likely market value or price

4 Identify Potential Buyers and Sellers Potential buyers: Who relies on or benefits from the ES? Is there a problem with current supply of ES? Willingness and capacity to pay? Potential sellers: Who owns the land? Who has ES property rights? (legal basis for PES?) Who are the resource managers? Who should be paid?

5 Define Supply of Ecosystem Services Define the project area: reference area and leakage belt Assess quality & current status of ES including rate/level of degradation (baseline/carbon reference scenario) Technical relationship between NR management and ES how clear? Capacity to enhance/maintain ES? Additionality of PES? Capacity to monitor impact of land use change on ES flow -so buyers know that ES are real ( additional )

6 Identify Degradation Agents and Drivers Agents: Groups or types of resource users who are damaging ecosystem in business-as-usual situation Drivers: Factors driving agents land-use decisions Importance: Baseline projection Assess leakage risks Project design, especially land use incentives strategy and leakage mitigation

7 Determine marketable value (potential price) Price of an ES is in voluntary markets is determined by supply and demand: what buyer is willing to pay and seller iswilling to accept Regulated markets: legislative basis, e.g., cap and trade markets created caps or emission quotas set by governments or negotiated (e.g., as in Kyoto Agreement)

8 2. Assess legal, policy & institutional context What rules exist for PES deals? Land and ES ownership who has legal right to sell? (who owns the trees?) Link between legal rights & resource management land use incentives? Local tenure & use rules sustainable management? Local institutional capacity Governance All these affect investor risk and transaction costs

9 Areas of Expertise Needed Negotiation and legal/contractual skills Experience of working with communities and social issues (partner with a local NGO?) Technical, e.g., carbon measurement (MRV) M&E skills

10 3. Project Idea Note Project scope, strategy and objectives Characterization of the without project baseline or counterfactual Estimation of forest carbon stocks or sequestration potential Carbon additionality Socio-economic context communities & other stakeholders Co-benefits: social and biodiversity impacts

11 The Carbon Project Cycle

12 Guide to developing forest carbon PDD Topics covered: Technical project design and baselines Measuring carbon (MRV) Legal issues Financial/business/marketing Community engagement Social impact assessment Biodiversity impact assessment

13 4. Structure PES Agreement Define rights and responsibilities of buyers and sellers Type of contract Payment basis delivery of what? Dispute resolution Payment / benefit sharing options (including in-kind)

14 Elements of an Agreement Terms and types of payments Timing of payments Requirement or conditionality for payment, e.g., report, data Managing and mitigating the risks Length of contract Dispute resolution

15 Options for Payment and Agreement Types PAYMENT TYPES Direct financial payments In-kind payments Recognition of rights/tenure Pay-per-tree Forest establishment and protection Profitable and sustainable land management Providing services AGREEMENT TYPES MOU Legal Contract Customary Law Agreements Handshake agreement Quid pro-quo Consider setting up multiple stakeholder managed trust fund

16 5. Implement & Monitor PES Agreement Finalize PES management plan Implementation issues: 6 month/annual operating plans Accounts tracking systems Governance of finance & benefit sharing mechanisms Train community members in admin & technical tasks Conflict resolution procedures Monitoring delivery of ES 16 16

17 Monitoring essential for PES projects PES are performance-based Sample monitoring sites Local people can measure carbon training Social & biodiversity benefits impact assessment monitoring plans required by CCB Standards (SBIA Manual) Ex-ante impact assessment is key to project design (e.g. Using Open Standards for the Practice of Conservation (Conservation Measures Partnership, 2007) Helps identify risks and potential negative impacts early detection of problems will save costs Important for adaptive management

18 Asante sana! Questions and Discussion Michael Richards The Katoomba Incubator